Kalshi, a prediction market platform, is facing mounting legal setbacks across multiple jurisdictions as federal appeals courts reject its attempts to block state gambling laws.
Two circuit appeals courts recently ruled against Kalshi in cases involving Connecticut, New York, and Nevada, according to the source. The company is also defending against a new lawsuit filed by Arkansas Attorney General Tim Griffin.
The core dispute centers on regulatory classification. Kalshi argues its platform offers “swaps” that fall under federal Commodity Futures Trading Commission (CFTC) jurisdiction, not state gambling laws. However, state officials contend that regardless of terminology, the platform functions as a gambling operation subject to state regulation.
In his lawsuit announcement, Griffin emphasized the substance-over-semantics issue. “Kalshi insists that its products are not gambling,” Griffin said, “but Arkansas law is concerned with substance, not semantics.” According to Griffin, Kalshi’s platform allows customers to “wager money on the outcome of just about anything,” violating Arkansas law that prohibits unregulated gambling.
Griffin’s lawsuit, filed in Arkansas state court, alleges Kalshi violated multiple state requirements. The company is accused of allowing users as young as 18 to gamble on the platform—below Arkansas’s 21-year minimum for electronic wagering accounts. The complaint also asserts that Kalshi failed to obtain necessary gambling licenses, submit to regulatory oversight, comply with state restrictions, or pay required taxes.
“Instead of obtaining the licenses, submitting to the oversight, complying with the restrictions, and paying the taxes required of lawful gambling operators in Arkansas, Kalshi opened its platforms to Arkansas consumers, including individuals as young as 18 years old, encouraged them to wager real money on sporting and entertainment events, and profited from those wagers,” Griffin stated.
The Trump administration has aligned with Kalshi on the regulatory question. Donald Trump Jr. serves as an advisor to the company and holds what the source describes as a “generous equity deal” in the platform.
Kalshi’s legal struggles span multiple states, with the company pursuing federal litigation to establish that state gambling laws do not apply to its operations. The recent circuit court rejections suggest those efforts face significant judicial skepticism.
Key facts
- Two federal circuit appeals courts rejected Kalshi’s attempts to block state gambling laws in Connecticut, New York, and Nevada
- Arkansas Attorney General Tim Griffin filed a lawsuit alleging Kalshi allowed users as young as 18 to gamble, below the state’s 21-year minimum for electronic wagering
- Kalshi claims its products are federally regulated “swaps” exempt from state gambling laws, but states argue the platform operates as unregulated gambling
- The lawsuit alleges Kalshi failed to obtain gambling licenses, pay taxes, or comply with state regulations